Market Price Rs 83 (FV 2)
Analyst : Janak Shah (M.B.A. Finance)
SEBI Registration No: INH000001717
Market Cap : Rs 1195 crs
Date: 23rd September 2016
Target : Rs 120
Time frame: 1 year
About the Company:
This company is managed by Mr Vijay Gupta, Mr Manish Gupta and Mr Mohit Gupta. It is a very conservative company in terms of taking loans as its almost debt free but very ambitious in terms of growth. It has a record of putting up a plant every 2 years out of internal accruals. It has very finely managed company.
The company has seed crust capacity of 4600 MT per day. It has Edible oil refining capacity of 1200 MT per day. Maize Processing Division of 2000 MT per day, Cotton yarn division has 65520 spindles and a Power plant of 42.85 MW. For the Maize its major competitors include Surjeet Starch, Sayaji Industries, Gulshan Polyols and Roquette Riddhi Siddhi. For Agro processing, it competes with Cargill, ADM industries, Ruchi Soya and Adani Wilmar.
For the year ending March 2016, the company reported cash profit of Rs 187 crores and Net profit of Rs 103 crores on a sales of Rs 2736 crores. It has a presence in 46 countries and over 3300 employees.
For the year ending March 2015, the sales were at 2531 crores and the Net profit was 84 crores.
This year that is March 2017, we expect sales of 3000 crores plus with Net profit in the range of Rs 160 crores and EPS of over 12. Assigning a pe of 10 will give us our target price of Rs 120. Dividend of 80 paise was paid this year.
Promoters hold about 71.96% stake while the Public hold 28.04% stake.
Comparisions to Peers:
The company is engaged in Maize processing, Agro processing and cotton yarn along with Power division. The company can manage to get a PE of about 10 due to its efficiency and debt free status.
The company is setting up a new plant of 350000 TPA of Maize processing at Dhule Maharashtra with a total outlay of Rs 3 bn from internal accruals. The operations will commence on November 2017. Post this expansion it will have a 25% market share. The companies vision is to be India largest wet corn milling company by year 2017.
The current rate of Rs 83 it can touch 120 in the next 1 year.
( Disclosure: The analyst has direct holdings in the company as on date of issue being published) Analyst ( Janak Shah ) is a sebi certified research analyst Registration No: INH000001717